Are we heading towards national licensing for B2B offerings?

The 8 September 2009 marked a milestone for online gaming regulation in Europe, whereby a preliminary judgment by the European Court of Justice in the case of bwin v Santa Casa set in motion the negation of the EU Treaty freedom to provide services and the adoption of national licensing regimes. This was the first of a series of preliminary rulings, which were justified on the notion that for ‘public health’ reasons, B2C gambling services would be best regulated at a national level and not on an EU-wide level.

Indeed, the ‘public health’ narrative was justified on the basis that gambling addiction is a public health matter, and therefore the relationship between gambling services and the citizen required ad hoc national regulation so as to reduce the harm that a citizen may suffer due to potential gambling addiction. Italy and France were the first countries to have their own B2C licensing based on this premise. Today, the majority of European member states have a B2C national licensing system.

However, the online gaming ecosystem does not solely constitute B2C operators, with games studios, B2B platforms and game aggregators all operating as B2B outfits, mainly licensed from Malta.

Malta introduced a B2B licensing framework in 2004, where the country did not impose limitations on its B2B licensees to which licensed B2C operators could offer their games to. When Denmark, Spain and Sweden launched their licensing regimes, they excluded licensing B2B firms, as their focus, rightly so, was to abide by the notion of ‘public health’, which was solely applicable to the B2C sector’s direct operator-player interface. Surely, an interface between legal persons (a B2B and a B2C company) cannot constitute a justification to regulate at a national level on the premise of public health, more so as no individual person is involved in the relationship.

Changes ahead

The exception to the rule was Romania, which in 2015 enacted its national authorisation regime and included a B2B licence, which received criticism at the time as licensing at the B2B level was not justified. However, in 2021, Greece launched its own licensing framework which included a B2B licence restricted for interaction with Greek B2C licensees. What might at first have been seen as a fluke was the start of a trendsetter.

Against the backdrop of economic difficulties that Covid-19 brought on European governments, extending the licensing regime to also cover B2B operators was very enticing from a state revenue point of view. Whereas there is clearly no ‘public health’ justification to regulate B2B operations at a country-by-country level, the closure of all infringement procedures by the European Commission in 2017 against all member states that were not in line with EU law on gambling matters, as well as the closure of the Commission’s gambling policy unit, means that there is no real guardian of the EU Treaty in gambling.

Therefore, each country can enact gambling restrictions as they deem fit, without the need for any ‘public health’ justification.

Sweden, Ireland and Denmark are three jurisdictions to look at closely as their lawmakers have set the direction for regulating B2B at a national level. If these three nations join Romania and Greece, should we expect B2B firms to face the same regulatory complexity experienced by B2C operators over the last 12 years? The writing is on the wall, especially when there is no functioning EU institution guarding the EU Treaty in the context of business-to-business gambling services.

Reuben Portanier is a partner at the regulatory and gaming advisory firm Afilexion Alliance which forms part of the GTG Advocates group. He is an IMGL member, ex-CEO of the Malta Gaming Authority and former board trustee on the International Association of Gaming Regulators.